VAT Return mistakes in the UAE: It is not common to make small or big mistakes in our lives, but when a wrong VAT return is filed, it is a matter of concern. It is essential that VAT returns are completed in the UAE in compliance with all applicable VAT rules and regulations. To submit a VAT return without any mistakes, it is better to take help from consulting agency like us (Fanavi accounting and bookkeeping), who are professional VAT consultants.
VAT Return mistakes in the UAE: An overview of incorrect VAT returns
According to the FTA, a taxable person commits a false VAT return or VAT error when he fails to account for the correct amount of output VAT or recovers incorrect input VAT. This is true regardless of whether the taxpayer has paid too much or too little tax in the FTA.
Voluntary Disclosure Form
Voluntary disclosure is a form a taxpayer uses to report to FTA an error or missing portion of their tax return, assessment, or refund application. If the computation of the tax due shows an error that is less than the required amount by AED 10,000, the taxable person must make a voluntary disclosure form within 20 working days of becoming aware of the error.
To guarantee that procedures and voluntary disclosures are correct, it is best to seek assistance from registered tax agents such as Fanavi accounting and bookkeeping. They can also assist you with further supporting documents that the FTA requests.
How to resolve VAT Return mistakes in the UAE?
- If the value of the error is less than AED 10,000, correct it using the VAT return for that period.
- If the amount of the error exceeds AED 10,000, make a voluntary disclosure to the FTA within 20 working days of being notified of the error.
Frequently Asked Questions – Incorrect VAT Returns
Frequently Asked Questions – Incorrect VAT Returns in the UAE
1. What is wrong with VAT Returns in the UAE?
When a taxpayer fails to calculate or recover the correct amount of output and input VAT, he files an incorrect VAT return.
2. What is Voluntary Disclosure (VD) in UAE?
Voluntary disclosure is a form issued by the FTA that allows a tax-registered person to correct an error in a previously filed VAT return.
3. Can there be any consequences for submitting a voluntary disclosure in the UAE?
Yes, according to Cabinet Decision No. 49 of 2021, filing a voluntary disclosure has administrative consequences. There are two types of penalties for submitting a voluntary disclosure:
- A fixed penalty of AED 1,000 on the first voluntary disclosure and AED 2,000 for each subsequent voluntary disclosure.
- Penalty based on a percentage
| VD Submitted within the below specified period Before the due date of submission of tax return, tax assessment, or related refund application. | Percentage based penalty |
| First-year | 5% |
| Second-year | 10% |
| Third-year | 20% |
| Fourth-year | 30% |
| After the fourth year | 40% |
On late payment of difference amount
The tax difference as per VD must be paid within 20 working days of submission of VD. In case of non-payment within the stipulated period, the following penalties shall be imposed:
- 2% of the unpaid tax shall be due on the day following the due date of payment, where the settlement of tax payable is late.
- A 4% monthly penalty is due one month after the due date of payment, and monthly thereafter on the same date, on the unpaid tax amount to date.
4. How do you detect incorrect VAT returns or VAT errors?
To find incorrect vat returns or vat errors that have already been submitted, use the following methods:
- VAT due diligence or VAT health check
- Services for VAT pre-audit
- Checking of already filed VAT returns
- Transaction analysis
5. When is the best time to discover a wrong VAT return and submit a VD in UAE?
The sooner an error or omission is discovered, the sooner it can be corrected, and the lower the penalties.
6. What is the last date for submission of VAT Voluntary Disclosure?
Within 20 working days of being notified of the irregularity, the taxable person must submit a voluntary disclosure.
Related Links
Exempt Supplies in the UAE | VAT on consultancy services | VAT on Free zone companies | VAT Registration in the UAE | VAT on Export from UAE to GCC Countries | Audit Services